What Tournament? N.C.A.A.’s Biggest Event May Be at a Higher Court

The former basketball player Ed O’Bannon, at a car dealership where he works in Las Vegas, is a lead plaintiff in a lawsuit against the N.C.A.A.Credit
Isaac Brekken for The New York Times

I don’t mean to be a skunk in the March Madness garden party, but did you notice that just before the tournament began last week, the plaintiffs in O’Bannon v. N.C.A.A. petitioned the Supreme Court to hear the case? Earlier, the defendant N.C.A.A. had asked for — and received — an extension to file its own petition. (It’s due April 14.) Although the Supreme Court agrees to hear only a small fraction of petitioned cases, O’Bannon is worth its attention.

Its central question is whether the N.C.A.A.’s amateurism rules — which currently restrict compensation for college athletes to a scholarship and a few thousand dollars to cover the “full cost of attendance” — are unreasonably and perhaps illegally restrictive. It’s not a question fans like to think about as they wallow in the best sports event of the year, but it is one that only the court can ultimately resolve.

The lead plaintiff is Ed O’Bannon, the former U.C.L.A. basketball star who, long after his playing days were over, saw his avatar in a college basketball video game and wondered why he wasn’t being compensated for the right to his image. Though that narrow question led to the filing of his lawsuit, it evolved into a much broader class-action suit that put amateurism itself on trial. Were the N.C.A.A.’s amateurism rules outlawing pay for athletes a necessary component of college sports, helping ensure competitive balance and providing the special sauce that persuaded fans to love it? Or were they an illegal restraint in a multibillion-dollar industry, a violation of the nation’s antitrust laws?

After a three-week trial in June 2014, Claudia Wilken, the federal judge hearing the case, ruled that the N.C.A.A.’s amateurism rules did indeed violate the antitrust laws. The O’Bannon plaintiffs were the official victors in the case.

But it also turned out that she bought much of what the N.C.A.A. was selling. If, by limiting compensation to a college scholarship, the N.C.A.A. was violating the law, then the obvious solution would be to disallow those limits and leave the business of compensating athletes to the universities or conferences. Some might choose to pay their athletes, and some might not, but it would be their choice to make. Competition — which is why the antitrust laws exist — would be fostered.

Instead, Wilken put her own limits on what athletes could reap from playing college sports. She said, for instance, that they should not be allowed to endorse products because it would “undermine” efforts to “protect against the ‘commercial exploitation’ of student-athletes.” She allowed universities to add on the full cost of attendance, something that was already in motion. And though she ruled that the universities could set up a trust fund for athletes, she capped the fund at $5,000.

In other words, while ruling that the N.C.A.A.’s compensation limits violated the law, she was allowing the association to continue placing limits on athlete compensation — just slightly different ones.

This was a huge win for the N.C.A.A. And it only got better when the United States Court of Appeals for the Ninth Circuit weighed in more than a year later. In a 2-to-1 decision, the court agreed with Wilken that the N.C.A.A.’s rules amounted to antitrust violations. But it actually took away the trust fund and limited compensation beyond the scholarship to the full cost of attendance. Why? Because, it said, cash compensation not related to education would damage amateurism. In other words, the N.C.A.A.’s amateurism rules were illegal — but amateurism had to be preserved.

Photo

An image taken from the video game EA Sports N.C.A.A. Basketball shows O’Bannon.Credit
EA Sports

It’s easy enough to understand why both sides would want to appeal to the Supreme Court — but it’s just as easy to see the risks for each of them if the court agrees to hear the case. In practical terms, the N.C.A.A. won the O’Bannon case, since the appeals court has said that it doesn’t have to allow compensation beyond what it is already permitting. But the fact that the N.C.A.A.’s rules have now been officially labeled antitrust violations could someday come back to haunt it.

There are other cases in the pipeline, including Jenkins v. N.C.A.A., which is being brought by Jeffrey Kessler, the lawyer who helped N.F.L. players win free agency. Kessler has made no secret of what he hopes to accomplish with the Jenkins suit: He wants to strip the N.C.A.A. of the right to set compensation limits for college athletes. The antitrust ruling by Wilken and the Ninth Circuit can only help him.

In a statement, Donald Remy, the N.C.A.A.’s general counsel, said, “We continue to maintain that the N.C.A.A. operates well within antitrust laws, but we also agree with the Ninth U.S. Circuit Court of Appeals’ recognition that benefits to student-athletes should be tethered to higher education.”

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The worst outcome for Remy and the N.C.A.A. is if the Supreme Court views the O’Bannon case solely through the prism of antitrust — in which case they will most likely lose. When adults sue the N.C.A.A. on antitrust grounds — as a group of assistant coaches did in the mid-1990s, after the association passed a rule capping their pay — they often win. (After losing at trial, the N.C.A.A. paid $54.5 million to settle the case.) When college athletes sue, however, they have a much harder time winning, in large part because judges are often swayed by the N.C.A.A.’s argument that because they are students, they shouldn’t be paid.

For the O’Bannon plaintiffs, an appeal brings the risk that the Supreme Court could overrule the Ninth Circuit and conclude that the N.C.A.A.’s amateurism rules are legal after all. In 1988, in a case brought by Jerry Tarkanian, the men’s basketball coach at Nevada-Las Vegas, the Supreme Court ruled that the N.C.A.A. did not have to provide due process when it accused someone of wrongdoing. From that moment onward, no athletes or coaches had any chance of winning a lawsuit based on the argument that they had been unfairly accused or unjustly punished. Should the court decide in favor of amateurism, the same would happen with compensation lawsuits. The Jenkins case would be dead in the water. No lawyer would be brave enough — or foolish enough — to bring new cases.

(O’Bannon’s lawyers, led by Michael Hausfeld, would also lose the $48 million in legal fees they were awarded for winning the case.)

Paying the players has become a public issue in a way that it never has before. Partly, this is because of the visibility the O’Bannon case has given to the issue. Partly it’s because advocates like Jay Bilas, the ESPN college basketball analyst, who has more than 1.1 million Twitter followers, are speaking out forcefully in favor of paying athletes. But it’s also because it is simply impossible to avert one’s eyes to the billions of dollars pouring into college sports, virtually none of which go to the players.

You can see it in just these first two rounds of the men’s N.C.A.A. tournament. All weekend, ESPN’s sports business reporter, Darren Rovell, tweeted out one money-related statistic after another. The Atlantic Coast Conference’s success — it has six teams in the round of 16 — will reap the conference $30 million. Nine of the teams still in the tournament are Nike programs; only two have contracts with Under Armour. A Duke season ticket costs $12,000 (including a mandatory “donation”). Wichita State’s coach, Gregg Marshall, whose base salary is $3 million, was due to get a bonus of nearly $100,000 had the Shockers beaten Miami. (They didn’t.) Michigan State’s basketball team made $7.5 million last year. And on and on. The scent of money is inescapable.

There is no secret where I stand on this issue: I believe the athletes should get some of that money. There are lots of people who disagree and think that a free education is more than enough compensation for playing college sports. The O’Bannon court decisions to this point simply haven’t provided a clear answer.

In May, a month or so after the N.C.A.A. files its own appeal, it’s likely that the Supreme Court will decide whether to take the case. I hope that it does, and that it will provide, at long last, some clarity. As Hausfeld put it to me recently, “We need to know.”

Email: nocera@nytimes.com
Twitter: @NoceraNYT

A version of this article appears in print on March 23, 2016, on Page B9 of the New York edition with the headline: Stakes That Dwarf Chase for a National Title. Order Reprints|Today's Paper|Subscribe